If you are on the hunt for a new investment, then it could be worth considering Life360 Inc. (ASX: 360) shares.
That's because if Bell Potter is on the money with its recommendation, this ASX tech stock could deliver outsized returns over the next 12 months.
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What is the broker saying?
Bell Potter is looking forward to the location technology company's second-quarter update next week.
While the broker believes that monthly active user (MAU) growth could be a touch short of consensus expectations, it is expecting paying circles growth to be much stronger than estimates. It said:
Life360 will report its 2Q2026 result next Tuesday, 11th August and our key forecasts are: MAU growth of 4.3m q-o-q (vs VA 4.4m); Paying circle growth of 155k q-o-q (vs VA 135k); Revenue of US$158.8m (vs VA US$157.3m); and Adjusted EBITDA of US$25.7m (vs VA US$25.6m). We are, therefore, lower than consensus at MAU growth, higher at paying circle growth and close to in line at revenue and EBITDA. We therefore see some downside risk around MAU growth versus consensus but a number consistent with our forecast will still imply an exit run-rate of close to 5m – which is good – given the Android issues which persisted into April and even some of May.
But conversely we see some upside risk around paying circle growth versus consensus and our above market forecast is driven by the unusually strong conversion rate in Q1 which we expect to remain elevated – but not as high – in Q2. Importantly a paying circle number around our forecast – or higher – could drive another upgrade in the full year revenue and EBITDA guidance given paying circles drive subscription revenue and this is only the Q2 result (i.e. there are still two quarters remaining).
Big potential returns
In light of its strong growth potential and attractive valuation, Bell Potter believes Life360 shares could deliver big returns over the next 12 months.
According to the note, it has retained its buy rating and $35.00 price target on the ASX tech stock. Based on its current share price of $28.47, this implies potential upside of approximately 23% for investors.
Commenting on its investment thesis, Bell Potter said:
There is also no change in our target price of $35.00 which is >15% premium to the share price so we retain our BUY recommendation. We see the stock as reasonable value trading on a 2027 EV/EBITDA multiple of c.25x which is a discount to the Technology One multiple of c.29x. We believe Life360 deserves to trade on a similar if not higher multiple than Technology One given it is global, a market leader and has higher forecast earnings growth over the next few years.
